Many cross-border e-commerce sellers have experienced this frustrating scenario: after securing hard-won orders, sudden currency fluctuations evaporate their expected profits. Recent developments at Amazon have added to the industry's growing concerns.
Amazon Expands Layoffs: Middle and Senior Management Now Affected
The previously reported Amazon layoffs, initially estimated at over 10,000 positions, have now doubled in scale. According to international media reports, Amazon management has begun evaluating employee performance in preparation for workforce reductions affecting approximately 20,000 employees.
The cuts span all operational levels—from fulfillment center staff and technical personnel to senior executives—with the process expected to continue over several months. The 20,000 reductions represent about 6% of Amazon's total workforce, marking one of the company's most significant restructuring efforts.
Amazon cites two primary reasons for the layoffs: pandemic-era overexpansion leading to redundancy, and deteriorating financial performance necessitating cost reductions. The process has already commenced, with some employees receiving termination notices requiring response within 24 hours, accompanied by severance packages.
The Yuan's Rollercoaster: Cross-Border Sellers Battle for Profit Margins
While Amazon's workforce reductions dominate headlines, currency volatility presents another pressing challenge for cross-border merchants. The Chinese yuan experienced rapid appreciation in November, briefly returning to the "6-yuan range" against the U.S. dollar in early December—a whipsaw movement that caught many sellers unprepared.
The onshore yuan (CNY) exchange rate against the dollar briefly broke through the 6.95 threshold, with single-day gains exceeding 1,000 basis points. For November overall, the onshore yuan appreciated 3.1% against the dollar, while the offshore yuan (CNH) strengthened nearly 4%.
"Our settlement rate dropped from over 7 yuan to about 6.93—it felt like riding a rollercoaster," one seller lamented. "Orders quoted last month might now be completely profitless." Another merchant noted, "During production halts from pandemic controls, our exchange losses from 7.2 to below 7 became unrecoverable within just 20 days."
Navigating Currency Risk: A Survival Guide for Cross-Border Commerce
How can cross-border sellers mitigate currency volatility to protect profits—or even achieve growth during market turbulence?
- Adopt Financial Neutrality and Hedging Tools: Maintain financial neutrality rather than speculating on currency movements. Utilize forward contracts and options to lock in exchange rates and stabilize profits.
- Prioritize Yuan-Denominated Transactions: Negotiate with partners to conduct transactions in yuan, transferring exchange risk to counterparties.
- Implement Dynamic Pricing Strategies: Adjust product pricing responsively—lowering prices during yuan appreciation to maintain competitiveness, or raising them during depreciation to offset losses.
- Optimize Supply Chain Efficiency: Reduce procurement and operational costs through supplier diversification, inventory turnover improvements, and warehouse cost reductions.
- Diversify Market Exposure: Expand into emerging markets to decrease reliance on any single economic region.
Currency fluctuations remain an inherent challenge in cross-border e-commerce. Proactive adaptation and strategic flexibility remain essential for maintaining competitive advantage in this volatile landscape.